If Congress cannot pass legislation to fund its operations by Tuesday, the U.S. government will shut down for the first time since 1996. At that time, Economic Studies senior fellow Alice Rivlin was serving as director of the Office of Management and Budget. She spoke with Neil Irwin of the Washington Post to provide insight on the decisions that must be made during a government shutdown. The below is reprinted from the Washington Post Wonkblog.
Neil Irwin: You were OMB director in 1995, in charge of both the budget itself and a lot of management issues for the federal government. So tell me what your job looked like in the fall of 1995 as the last government shutdown loomed.
Alice Rivlin: Remember, there were two shutdowns. There was a short one, then the long one that everyone remembers. Between the two we realized things were really serious and that we’d better be prepared. I put somebody in charge of handling the shutdown. It was John Koskinen, who has been brought back into government to run the IRS. [His nomination as IRS commissioner is pending].
He was the management deputy at OMB at the time, and he sort of took over as Mr. Shutdown. The main question that OMB has to solve is who is essential and who isn’t. That’s not obvious. I think there are words in the statute about “life-threatening.” But It’s really not obvious who’s essential and who isn’t.
In ’95, the situation was different than it is now. Between the two shutdowns, as I remember it, Congress actually passed some of the appropriations, including the Pentagon, or at least something, so we didn’t have the prospect of soldiers not getting paid. So ‘95 was long, but it was a partial shutdown.
NI: So that makes a big difference in a shutdown, whether Congress passes appropriations to fund a few areas of government like paying military.
AR: Right. At that time it wasn’t up to us whether to pay soldiers. That was in the law already. Right now Congress has not passed any appropriation bills. My memory is that in ’95 they had passed some of the appropriations bills, I think only two or three. But that took care of part of the problem. My memory is that it took care of military pay.
NI: So, what are some of the calls you are getting from agency heads?
AR: The questions you get are “Let me tell you about this activity; is it essential.” So you have to make a call on that.
My two favorite stories of that period are these. One was [the National Institutes of Health]. The clinical facilities where they had patients, that was clearly essential. But most of NIH is research and research management. We decided that was not essential. And so we sent the researchers home. But then you have laboratory animals. You can’t leave the laboratory animals to starve. So the technicians that take care of the laboratory animals are essential and the researchers are not.
My other favorite story has to do with national Christmas tree. It was December. So one of the calls we had to make was what do we do about the national Christmas tree. I said it was nonessential.
Then we began getting phone calls not from protesters but from people offering assistance. Pepco called and offered free electricity. Some security companies called and said we’ll provide security.
We may have consulted the president, I don’t remember. In the end we turned the Christmas tree on.
NI: With private donations?
AR: Yes, at no cost to the government. Those are just two examples of a whole lot of things that were happening in this period that stuck in my head.
NI: So, were agency heads lobbying OMB to try to make more of their operations “essential”?
AR: Not necessarily. They genuinely wanted guidance. And they want to tell you what happens if we close down.
Closing some kinds of activities is costly. You can’t close down a nuclear reactor, for instance. You can think of various kinds of activities that are costly to shut down and start up again. The discussion with agency might be one where they say, “Let us keep this open because it will cost so much to start it up again.”
But that’s not in the law. There’s no guidance in the law. It’s a judgment call. John Koskinen made most of these. And at the margin, there were a bunch of close calls.
NI: Meanwhile, you had to juggle both the negotiations over a new budget deal and the mechanics of carrying out the shutdown. How did you manage it all?
AR: Being the OMB director is impossible to begin with. That just makes it a little worse.
NI: Do you remember anything else about some of the more unusual calls you had to make?
AR: I really don’t. Those two have stuck in my mind. But, you know, mostly it’s fairly routine. I don’t mean routine in the sense that you do it all the time. But the main outlines of what has to happen are there in the language in the statute, even though it’s vague.
The government hadn’t shut down for a long period in a very long long time, so we thought we were dealing with a different problem than a very short-term shutdown. I remember we said let’s make sure we keep a record of exactly what we did for the next time it happens.
NI: You kept records of what decisions you made and why?
AR: Yes. Somebody at OMB is probably dusting that off right now. I guess they’ve dusted it off a few times in the interim. A shutdown has looked like a possibility since then.
NI: Can you talk about how it affected government employees?
AR: Right, there two kinds of things. People who are furloughed are not at work, not allowed to be at work, but they had counted on this income; then people who had to be there or maybe were working extra to try to keep things under control. But it’s in the end up to the Congress. It’s a congressional appropriation. The president I assume would propose that backpay be given for everybody for that period, but I don’t know if he’ll get it.
NI: Government employees dealing with furloughs because of the sequester are already having their incomes pinched, so it is a particularly bad time, right?
AR: Yes, certainly. But it’s not just about federal employees. The emphasis on employees not getting paid is important, but remember those employees buy stuff and you have a lot of people impacted who will never recover. They run the lunch counter where a whole bunch of employees regularly eat and that sort of thing. I was in a cab today with a cab driver who said, “My wife works for the government, we just closed on a house, have a bigger mortgage. What do we do if she isn’t paid for a while?”
NI: And that’s enough of an effect to have an overall economic impact?
AR: I think you could see it in the data, certainly if you look at regional data for the Washington region.
NI: What were things like day to day for you?
AR: There were a lot of late nights because we were in the middle of a negotiation. I think the shutdown only added to the problem. You had winter, and you had to get to work in the snow, so was part of it.
I remember we had a meeting at the White House with a bunch of congressional people. I live in the District, so I managed to get there. But I remember [then-House Minority Leader] Dick Gephardt lived out in Maryland somewhere, and he had trouble getting to the White House because of snow.
The president said cheerfully at the end of a long meeting, “We’ll start again at 9 a.m. tomorrow morning.”
And Gephardt said: “That’s easy for you to say! You live here!”
Sentiment inside the Beltway has turned sharply against China. There are many issues where the two parties sound more or less the same. Trump and others in the administration seem heavily invested in a ‘get very tough with China’ stance. It’s possible that some Democrats might argue that a decoupling strategy borders on lunacy. But if Trump believes this will play well with his core constituencies as his reelection campaign moves into high gear, he will probably decide to stick with it, if the costs and the collateral damage seem manageable. But that’s a very big if, especially if the downsides of a protracted trade war for both American consumers and for American firms become increasingly apparent.